Excess Flood Insurance: What Is It? Who Needs It?

Excess flood insurance is a kind of private flood insurance for homes that would cost more than $250,000 to rebuild.

The government-sponsored National Flood Insurance Program (NFIP) will only pay up to $250,000 to repair or rebuild your home. If your home costs more than the NFIP limit, you should consider getting excess flood insurance, especially if you live in a high-risk flood zone.

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Who needs excess flood insurance?

Your mortgage lender may require you to buy excess flood insurance if your home is worth more than $250,000 and you have flood insurance through the National Flood Insurance Program (NFIP).

If your home is in a special flood hazard area (SFHA) and you have a mortgage, you'll typically need to have a flood insurance policy.

Mortgage lenders usually require you to have enough flood insurance to cover the smallest of these three amounts:

  • The cost to completely rebuild your home
  • The balance remaining on your mortgage
  • $250,000, which is the coverage limit for NFIP insurance

However, if your mortgage is greater than $250,000, your lender may ask you to buy additional coverage. It's not a legal requirement, so not all lenders will require excess flood insurance. You may find a lender that offers you a mortgage even if NFIP flood insurance doesn't completely protect you.

Even if your lender doesn't require excess flood coverage, it may be worth the extra expense. This is especially true if you live in an area at high risk for flooding.

Special flood hazard areas have a 26% chance of flooding over the course of a 30-year mortgage, according to FEMA. If you have a loss due to a flood and the $250,000 isn't enough to fix or rebuild your home, you'll have to pay the remaining costs. You should consider how much you'd have to pay for home repairs after flood damage versus the cost of coverage to decide whether you should buy excess flood coverage.

Who doesn't need excess flood insurance?

You don't need excess flood insurance if your home would cost less than $250,000 to rebuild.

That's because you can get enough coverage with a National Flood Insurance Program (NFIP) policy.

You probably don't need excess flood coverage if your home isn't at a high risk of flooding, as the policy could be quite costly.

How are excess flood insurance rates determined?

Excess flood insurance companies calculate rates the same way they determine regular flood insurance prices. Rates vary depending on the type of coverage and limits you choose, your insurance history, and your home's overall flood risk.

Several factors affect your home's flood risk, including:

  • Elevation of your home above the base water level
  • Distance from a body of water
  • Foundation (e.g., basement, crawl space, slab)
  • Elevation of the lowest point in your home above ground level
  • Home construction material

Every excess flood insurance company has its own way of calculating rates. This means prices will vary from company to company, and you should check with several companies to find the cheapest price for coverage.

This differs from the National Flood Insurance Program (NFIP), which is backed by the government and costs the same amount regardless of where you buy a policy.

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What does excess flood insurance cover?

Excess flood insurance covers repairs or replacement of your home's structure and essential systems after damage caused by flooding.

Flood damage is covered whether it's caused by a rainstorm, tsunami, hurricane or other weather event.

Excess flood insurance also covers personal property in your home. This includes items like clothing, furniture and electronics. There may be restrictions for items in a basement since they're more likely to be damaged during a flood.

These are the same types of damage and expenses covered by a regular National Flood Insurance Program (NFIP) flood insurance policy. However, the NFIP only pays a maximum of $100,000 for damaged personal property.

Some excess flood insurance companies may offer extra coverage add-ons you can't get from the NFIP. These may include:

  • Additional living expenses if your home is unsafe to live in
  • Reimbursing you for lost income if you run a home-based business
  • Cost of flood prevention, such as sandbags

However, extra coverage options vary by insurance company. You should check with multiple companies if there is a specific coverage you need.

Excess flood insurance coverage limits

The maximum amount of excess flood insurance coverage you can buy varies by company. Maximum coverage limits can go up to millions of dollars. For instance, Chubb offers up to $15 million of coverage for your home and its contents.

Alternatives to excess flood insurance

Homeowners who want or need coverage beyond the $250,000 National Flood Insurance Program (NFIP) limit can also buy a private flood insurance policy. A completely private policy and excess flood insurance have many of the same benefits, even though excess flood insurance is a combination of two separate policies.

There are some differences to consider. But most importantly, both options can cover the entire value of your home.

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One of the most important benefits of a private policy over an NFIP/excess combination is that private policies have a shorter waiting period or no waiting period. That means you'll have protection right away.

NFIP policies typically have a 30-day waiting period before coverage starts. Private flood insurance companies may have a waiting period of zero to 14 days.

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You may also find that a single flood policy from a private insurance company is cheaper than buying separate private and public policies.

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Another perk of private flood insurance is that one company is covering all of your needs. There's only one bill and only one claim to make after damage. That will make your life much easier if you ever have flood damage.

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On the other hand, buying excess flood coverage and NFIP coverage instead of a single private policy allows you to benefit from both a private and government-backed flood insurance policy.

For example, the NFIP can't cancel your policy because of high risk. Private flood insurance companies can cancel your policy or choose not to renew your coverage for any reason.

If you're considering excess flood coverage, you should compare quotes from multiple insurance companies. You should get quotes for both an excess and a private policy and consider which option better meets your needs.

The easiest way to compare private flood insurance quotes is typically through a local independent insurance agent. An independent agent should be able to get quotes from multiple flood insurance companies, which can save lots of time. They may also have experience working with the companies, so they know which flood insurance companies near you have the best customer service.

Frequently asked questions

What is excess flood insurance?

Excess flood insurance is a policy offered by a private insurance company that compliments your National Flood Insurance Program (NFIP) policy. You may need excess flood insurance if your home is worth more than $250,000 because that's the maximum amount the NFIP will pay to fix or rebuild your home after flood damage.

Is flood insurance separate from homeowners insurance?

Yes, standard home insurance doesn't cover damage caused by flood waters. If your home is at a high risk of flooding, you'll need to buy a separate flood insurance policy.

What is the max amount of coverage you can get under a flood insurance policy?

Flood insurance from the National Flood Insurance Program (NFIP) can cover up to $250,000 of damage to the structure of your home and $100,000 of damage to your personal property, like furniture and clothing. If you need more coverage, you can buy an excess flood insurance policy or private flood insurance.

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